Contact: Katrina Cavalli, 212.313.1181, [email protected]

SIFMA Statement on TruPS CDOs Relief Under the Volcker Rule

Washington, D.C., January 14, 2014–SIFMA today issued the following statement from Kenneth E. Bentsen, Jr., SIFMA president and CEO, on the approval by five federal agencies of an interim final rule to permit banking entities to retain interests in certain collateralized debt obligations backed primarily by trust preferred securities (TruPS CDOs) from the investment prohibitions of section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, known as the Volcker rule:

“While we welcome the relief provided to certain holders of TruPS CDOs, we believe that regulators must address the larger problem of the inclusion of senior debt securities issued by collateralized loan obligations (CLOs) in the Volcker Rule’s prohibitions.  If this situation is not remediated, corporate borrowers could face higher credit costs and banks will likely suffer unnecessary losses wholly unrelated to the risk of the CLOs themselves, but rather due to the technical language of the final Volcker Rule.  We continue to encourage regulators to issue guidance clarifying that banks may hold CLO debt securities.”